The Betashares Australian Major Bank Hybrids Index ETF (ASX: BHYB) is now available on the ASX.
BHYB offers cost-effective, passive exposure to a portfolio of hybrid securities issued by the four largest Australian banks.
BHYB provides investors with:
- Attractive tax-efficient income
BHYB pays income monthly at a rate expected to be significantly higher than cash and senior bonds, along with franking credits - Portfolio diversification
Hybrids historically have exhibited low correlation to equities as well as generally shown defensive characteristics during market declines - High quality exposure
To be eligible for inclusion in the index BHYB aims to track, a hybrid security must be issued by one of Australia’s ‘Big 4’ banks, and have a market capitalisation of at least $100 million - Cost-effective exposure
BHYB aims to track the performance of an index, so there are no ‘active manager’ fees
Investing in a hybrid security fund, as opposed to individual hybrids, has several benefits, including:
- Portfolio diversification – Investing in a hybrid security fund offers diversified exposure to a spread of hybrids, rather than having to research and choose a couple of individual hybrids only
- Issuer diversification – Investing in a hybrid security fund means diversified exposure to a range of issuers
- Liquidity – May benefit from access to superior liquidity compared to directly held hybrids
- Simplicity – Hybrids are quite complex securities with varying terms and conditions. Investing in a hybrid security fund may be suitable for investors who lack the expertise or time to evaluate whether than individual hybrid suits their investment objectives